Both the UK Chancellor and the Scottish Finance Secretary announced temporary cuts to Stamp Duty Land Tax (SDLT) and Land & Buildings Transaction Tax (LBTT).

SDLT is payable on residential and commercial property purchases in England and Northern Ireland. LBTT is the Scottish equivalent and different rates and rules apply.

Looking firstly at SDLT. It is paid by the purchaser of property and the threshold at which this tax kicks in (for residential property) is to be temporarily increased from £125,000 to £500,000. This change is to take effect immediately (8 July 2020) and will run until 31 March 2021.

The Chancellor stated on 8 July that this would reduce the average SDLT bill by £4,500 and that 9 out of 10 people buying homes will pay no stamp duty at all.

On Thursday 9 July, the Scottish Finance Secretary announced a similar change to LBTT i.e. the threshold at which this tax kicks in (for residential property) is to be temporarily increased from £145,000 to £250,000. This change will take effect from Wednesday 15 July and will also run until 31 March 2021.

This means that every residential property purchase in Scotland over £250,000 will have a reduced LBTT bill of £2,100. It is predicted that 8 out of 10 transactions fall below £250,000 and therefore will have no LBTT liability at all.

In addition, the Scottish Government will set aside a further £50m this financial year towards the First Home Fund, a shared equity scheme that directly supports first time buyers with their deposits (up to a maximum of £25,000).

It is important to note that the temporary cuts to SDLT and LBTT are available not just to those buying their own homes; residential property investors whether individuals or companies will also be able to benefit from this temporary cut. Anyone in Scotland in the process of completing a purchase, should try to defer completion until the new rate comes into effect.

However, for those buying residential property that is not their main home, an Additional Dwelling Supplement is payable (3% in England, 4% in Scotland). This charge is not being altered.

Also, there are to be no changes to the SDLT or LBTT payable on commercial property transactions.

Those who have just recently bought a house will be feeling sore just now as there is to be no backdating!

These measures are designed to encourage movement in the housing market in anticipation of the spin off benefits to the economy. Only time will tell if they have the desired effect. As always, we are here to advise on this and all tax aspects of purchasing property.